When to flout conventional financial wisdom

Conventional financial wisdom: Your mortgage payment can be up to 28 percent of your gross income as long as your total debt payments don't exceed 36 percent of your gross income.

CFP Walt Mozdzer of Syverson Strege & Co. of West Des Moines, Iowa, recently counseled a surgeon and his wife about how much house they could afford. The surgeon is starting his first hospital job, and he will make about $240,000 a year. The hospital is paying off his $225,000 in school loans. With about $20,000 a month in gross income, 28 percent would be a house payment of $5,600 a month. Can the doctor skip the McMansion and go straight to the mansion? Not so fast.

Instead: Remember, every family is different. For the surgeon and his wife, the magic number was about 25 percent of net income.

Why: Although the hospital will pay off the surgeon's medical school loans, those payments will count as income, and the family will have to pay taxes on that phantom income, says Mozdzer. And after living in cramped quarters, he and his wife need money to furnish that house. Also, after living on a shoestring budget for years, they'll have pent-up demand for vacations, dining out, new clothes and more, Mozdzer says. Finally, they're overdue to start college funds for their kids.

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